According to a report, recently increased state government expenditure and private investment have lowered rural migration from Bihar to fall by a third in recent years, resulting in labour shortages and 35-50% higher wage bills for real estate firms. Around 50% of migrant labours to other states are from Bihar.
"There is a huge shortage of labour and that is leading to higher cost of construction as well as project delays," says Ajay Chandra, managing director of Unitech, one of the country's top most real estate firms.
Meanwhile, with 14% economic growth in 2010-11, Bihar is the fastest growing state in the country as government expenditure has gone up substantially since Nitish Kumar government assumed power in 2005.
Deputy Chief Minister of Bihar, Sushil Modi said that the budget plan expenditure for Bihar this year is Rs 24,000 crore against Rs 18,000 crore last year. This is being spent on building roads, hospitals and schools. Construction is seeing a 20% year-on-year growth in the state and minimum wages are also being implemented strictly.